Citadel asks SEC to regulate DeFi protocols as exchanges, sparking backlash

Citadel Securities sent a letter to the SEC advocating for stricter regulation of decentralized finance (DeFi) protocols involved in trading tokenized U.S. equities. Citadel argued that these protocols often meet the definition of an 'exchange' or 'broker-dealer' and that granting broad exemptions would create a dual regulatory regime, undermining investor protections like transparency and fair access.

The firm urged the SEC to use notice-and-comment rulemaking rather than broad exemptions to ensure that tokenization benefits are realized under the existing bedrock principles of U.S. equity markets.

This recommendation immediately sparked backlash from the crypto community. Uniswap founder Hayden Adams accused Citadel CEO Ken Griffin of lobbying against DeFi, while Blockchain Association CEO Summer Mersinger called Citadel's interpretation "overbroad and unworkable," warning that regulating software developers as financial intermediaries would harm U.S. competitiveness.

(Source：The Block)